Tough state rules on outages too late for Sandy

Brian Lockhart

Published 11:07 pm, Thursday, November 1, 2012

New state regulations could mean millions of dollars in fines for utilities that botch their response to devastating storms like Hurricane Sandy. But, in a case of awkward timing, the rules come a handful of days too late to apply to this week's storm cleanup.

They do, however, place further pressure on Connecticut Light & Power and United Illuminating, already under intense scrutiny for a widely panned response to August 2011's Tropical Storm Irene and the freak nor'easter that hit Oct. 29 of last year.

Those storms proved public relations disasters. This spring, lawmakers passed a bill to fine utilities up to 2.5 percent of yearly revenues for future debacles that leave customers in the dark for over 48 hours. Those monies would be rebated back to customers.

Until now, that could only be done by PURA indirectly when the companies sought rate hikes.

So, if the new rules were in effect, CL&P, with earnings of $873 million, would stand to lose up to $21.8 million if regulators found the company fell short of standards. United Illuminating would have to fork over $6.8 million of its $275 million in profits. And none of it could be reclaimed by billing customers.

PURA was charged with hammering out the details by Nov. 1 of this year for utilities to wrap into their emergency plans.

"Overall I think it's a very good beginning, but it also just seems to me there's question marks in this," said Joseph McGee, of Fairfield, tapped by the governor to run an investigation into last year's storm response.

One of the major weaknesses of the utilities' disaster preparation plans revealed by Irene and the nor'easter was that CL&P's definition of an "extreme event" was outages affecting only 100,000 customers. The nor'easter left over 809,000 of the company's customers in the dark.

The standards appear to provide utilities some wiggle room when it comes to how quickly they must restore power, calling for "all reasonable efforts."

"It's not clear to me exactly what the penalty structure is," McGee said after an initial review of the standards Thursday evening.

PURA also will now require the utilities to improve their communications with state and local officials and to offer more disaster drills.

Electric utilities were also faulted last year for not acting quickly enough to hire out-of-state crews to bolster in-house linemen.

Although the standards require the utilities to spell out how many outside resources are needed for different crises, PURA stopped short of demanding the companies pay to have contractors on call to ensure manpower is not snapped up by other states during regional emergencies.

CL&P told PURA that such a provision would be a "first-of-a-kind concept" and possible major expense, so PURA instead required CL&P to experiment with a pilot program this winter.

Efforts to step up tree trimming to avoid outages are being handled as a separate matter between PURA and the utilities.

PURA continues to study whether to reimburse residents whose food and medicine is spoiled during lengthy outages. That report is due lawmakers in February.

Attorney General George Jepsen, a vocal critic of CL&P's performance last year, declined initial comment Thursday on the new standards. But he noted that even without the regulations in place, PURA this summer announced it may penalize utilities the next time executives seek a rate increase.

"And we certainly have the authority to evaluate their performance in Sandy and, if we find it wanting, to hold them accountable," Jepsen said.